SAN JOSE, Calif.  Swamped with thousands of complaints
from users, Yahoo said Friday it will stop selling X-rated videos and other
pornographic material on its Web pages.

The flap comes at a difficult time for Yahoo, which had
been one of the biggest Internet success stories but is now struggling to make
money and just announced layoffs.

Yahoo has had adult items on its shopping pages for two
years. On Wednesday, the Los Angeles Times reported that Yahoo had quietly
expanded its offering of hard-core videos and DVDs in search of new revenue.

Yahoo president and chief operating officer Jeff Mallett
said Friday that the company had not significantly increased its selection of
adult products, but had simply created a new category for them and tightened
controls to keep children out.

Still, Mallett said the perception that Yahoo was embracing
porn led users to swamp the company with angry calls and e-mails.

As a result, Yahoo said porn will be removed from its shopping
and auction pages and its classified listings, and the company will stop entering
into new contracts for banner advertisements for adult merchandise.

Most other leading Internet companies have kept a greater
distance from adult material.

Porn has long been one of the Internet's biggest money
makers, but Mallett said dropping X-rated material would not affect Yahoo's
bottom line. Spokeswoman Nicki Dugan said adult material is "an insignificant
portion of revenue."

Yahoo is an Internet portal  a jumping-off point
for Internet shopping and browsing, as well as a place to visit in its own right.
It claims to have 192 million registered users worldwide.

Yahoo was the third most popular Web site in the United
States last month, with 60 million visitors, behind AOL Time Warner and Microsoft's
network of sites, according to Jupiter Media Metrix.

Once one of the most profitable Internet companies, Yahoo
has seen online advertising  which generated 90% of last year's sales
 plunge with the dot-com bust and the overall slowing of the economy.

Yahoo revenue is expected to drop at least 30% this year
from $1.1 billion in 2000. On Wednesday, the company announced more than 400
layoffs, 12% of the workforce.

Yahoo has been embroiled in other controversies over the
material on its huge site.

French groups sued last year to block Yahoo from letting
Nazi memorabilia be sold on its auction pages. A French judge ordered Yahoo
to keep French users from seeing the items.

Yahoo said the order would be impossible to comply with.
Later, Yahoo banned the sale of Nazi merchandise, saying it did not want to
profit from it. Still, Yahoo is asking a federal judge to rule that French court
decisions cannot be enforced against American companies.

Yahoo also has come under fire for serving as a host to
online chats by white supremacists and other hate groups.

Yahoo recently began donating ad space in the chat rooms
to Tolerance.org, a new site set up by the Southern Poverty Law Center. The
ads also appear when users enter words such as "Nazi" or "hate" on Yahoo's search
engine.

Copyright 2001 Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or redistributed.